Firms focus more on digital transformation services

Accounting and consulting firms are vying for a greater share of the so-called “digital transformation” market, which grew by 70.8 percent globally to $48.5 billion in 2017, according to a new report.

Source Global Research reported Wednesdayon the market share of the top four consulting firms in the global market in 2017, led in first place by Accenture (with 9.9 percent of the market), followed in second place by Deloitte (with 8.9 percent of the market, and McKinsey and PwC tied for third place with a market share of 5.3 percent each. The top 10 firms’ share of the market has declined, from nearly 60 percent of the overall market in 2016 to just over half in 2017. Nearly all of the larger firms have lost market share and are likely to see their dominance threatened further as the market continues to evolve, according to the report.

While collectively the Big Four accounting firms hold the largest share (21 percent) of the digital transformation market, the profile of technology firms has increased. Accenture displaced Deloitte as the firm with the largest share of the overall market in 2017, while Cognizant has entered the top 10 for the first time in the annual survey, with 2.5 percent of the market.

Digital transformation market share

The digital transformation market in the U.S. was the biggest and most mature, and it was also one of the fastest growing in the world, expanding 77 percent to $26 billion in 2017. However, in terms of growth rates, China outpaced the U.S. by showing growth of 82 percent to $1 billion, thanks to Chinese technology giants such as Baidu, Alibaba and Tencent. The much smaller market in the United Kingdom also grew significantly, increasing 75 percent to $3.8 billion in 2017.

The Source Global Research report found the digital transformation market is growing so quickly, it is displacing some older consulting services. But clients often find changing people’s skills and mindsets to be the most difficult part of digital transformation programs and would prefer consultants do more with the people side of transformation.

“Many clients are saying that their consultants do so much around technology and process change but don’t seem to be able to engage with the human dimension of transformation,” said Source Global Research director Fiona Czerniawska in a statement. “The strengths and weaknesses of consulting firms vary greatly in this area — both in terms of how they position their digital transformation stories and how effectively they engage with clients. However, our research in this market has led us to identify McKinsey, PwC, Cognizant, IBM and EY as the firms that we think have the best chance of success.”

The report found that while two-thirds of the clients surveyed indicated the quality of digital transformation work done by consulting firms was either “high” or “very high,” they don’t believe it’s as good as the work done by firms in more traditional areas, such as business strategy, or in areas where the impact of their work is more measurable, such as sales and marketing, and data and analytics.

“Digital transformation isn’t alone in performing below par as technology services generally do badly, but this should still be a cause for concern, given the extent to which consulting firms are relying on digital transformation to fuel their growth plans,” stated Source Global Research head analyst Zoë Stumpf.

“Digital disruption is impacting everything,” said Accenture Strategy, APAC, senior managing director Trevor Gruzin. “It impacts where companies should place their bets, their transformation agenda, their business and operating models, customer and workforce engagement, the building of new digital capabilities, and even operational improvement. Digitization is touching every part of the traditional consulting services landscape.”

For reprint and licensing requests for this article, click here.